GVK, via GVK Airport Holding, owns 50.5% in Mumbai International Airport Ltd. (MIAL), the consortium that runs the existing airport in the city and has won the bid for developing a new Rs 16,000 crore airport project, Navi Mumbai International Airport Ltd (NMIAL) on its outskirts. MIAL’s other stakeholders are Airports Company South Africa (10%), Bidvest (13.5%) and the state-run Airports Authority of India (26%).

Talks for a stake sale at GVK Airport Holding have been on for several months and a deal should be a concluded before the end of the year, said the second person. Citi group has the mandate for managing the deal, said the third.

The new investor would have a holding in both the downstream airport assets, said one of the people cited above.

Mumbai airport is India’s second busiest and also its most congested. It handled 48.50 million passengers in 2017-18 and holds the record for being the world’s busiest single-runway airport.

NMIAL is seen as a critical alternative to the saturated existing airport. It will be built on 1,160 hectares of land in phases and will eventually cater to 60 million passengers per year. The initial concession period is 30 years from the appointed date and is extendable for a further 10 years. GVK recently announced financial closure—that is has tied up funds— for the project.

The funds from the planned stake sale in the airport holding company will be primarily used in NMIAL in which MIAL holds 74% stake.

Spokespersons at GVK, Citi group and Global Infra declined to comment. Emails sent to the other two investment companies didn’t yield responses till the story went to press.

The deal, if it fructifies, will be GVK’s second divestment in its airports business. The conglomerate with interests also in energy, power, road infrastructure and mining last year sold its complete stake in the Bengaluru airport, India’s third busiest, to Fairfax Holdings owned by Prem Watsa, a Canadian-born billionaire investor of Indian origin. Fairfax bought the 54% stake in several tranches investing a total of $400 million, its largest in India yet.

The planned stake sale highlights GVK’s pressing need to raise funds, even as the airports business remains biggest money spinner and profit generator. GVK last FY almost trebled its profit before taxes and interest in the airports segment to Rs 593.54 crore. Revenue grew 10% to Rs 3,423 crore. The profit (ex taxes and interest) from the airport segment accounted for 82% of all segments combined while revenue was 88% of total. Overall, the company pared its consolidated annual net loss to Rs 537.37 crore from Rs 1,343.63 crore a year earlier and swung to an operating profit from a loss.
GVK has over the last few years approached several investors for the airports business, including US buyouts firm TPG Capital, Singaporean sovereign fund Temasek, Canada’s CPP Investment Board and Fairfax. Earlier this year, the company made alternate plans to raise $1 billion through an issuance of dollar bonds. That hasn’t fructified.

The state-run QIA, with the Arabic peninsula’s flagship carrier Qatar Airways, plans to also launch an airline in India. Qatar’s CEO Akbar Al Baker has on several occassions spoken about a proposal to be forwarded to the ministry of civil aviation soon. GVK’s rival GMR Infra, the operator of Delhi and Hyderabad airports, had been in talks with QIA for a stake sale in its airports business but talks fell through over differences in valuation.

In 2016, QIA with the Russian Direct Investment Fund, acquired a quarter of St Petersburg’s Pulkovo airport, Russia’s fourth largest. It is part of a consortium of investors in London’s Heathrow airport. This year, Qatar Airways bought 25% of Moscow’s Vnukovo International airport, the country’s third largest.

In April this year, Sydney-based AMP bought a 49% stake in London Luton Airport. It last year bought UK’s Leeds Bradford airport and also owns the country’s Newcastle airport among several other airports in the world.

New York’s Global Infra was part of a consortium that bought Gatwick Airport, UK’s second largest in 2009 and the Edinburgh Airport in 2012.

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